Circle (CRCL) selloff may be 'overreaction' but Open USD faces adoption test

Circle shares (CRCL) cratered on Tuesday after the new Open USD stablecoin network rattled investors, but analysts say it's too early to conclude the consortium poses a serious threat to USDC.

The Open Standard, backed by more than 140 companies including Stripe, Coinbase, Visa, Mastercard and BlackRock, immediately attracted attention because it attacks one of Circle's key advantages: its network of institutional partners. Some went as far as to call it an "existential threat" to Circle, whose business model relies primarily on retaining the interest earned on the assets backing USDC. OUSD, by contrast, would distribute that yield to partners rather than keep it for the issuer.

"The marquee partner names clearly suggest a real threat to Circle's business," Rob Hadick, general partner at venture capital firm Dragonfly, told CoinDesk. He added that Stripe's broad suite of financial products could give the consortium an edge by allowing it to "uniquely undercut Circle's economics."

Others are more cautious in their take, at least for now.

"It has a strong line-up on paper, which will impact the near-term sentiment of CRCL until OUSD is launched later this year," Clear Street managing director Owen Lau said.